Environmental Economics

[Konok812]

suppose demand is given by q=50-p and marginal cost for generating electricity is 10 dollar per megawatt hour. Health damage for the smoke is 15 dollar per megawatt hour. Here, smoke generation is proportion to the electricity generation. Now, what price will be charged and how much electricity will be produced?

[fiction-factory]

>smoke generation is proportion to the electricity generation
Is there a word missing? Directly?

[fiction-factory]

you are probaly expected to assume selling price = marginal cost
I assume p= price in the q=50-p formula
You must have some examples of these in your text books /lecture notes-

[fiction-factory]

sorry possible missing words might be ..smoke generation is IN DIRECT proportion...

[Zacs-Master]

When competitive producers choose their profit-maximizing output level, they consider only their private marginal cost and do not take account of the negative externality associated with health damages. In a competitive market.

[Peter Pedant]

In which case it is the cross over point betwee

q = 50- p and q = 10p or p = 4.5 and q = 45.5

yeah thanks ZM - missed the ob vious thing that health damage is not a direct or indirect cost ( or a cost at all)

it would be kinda helpful to know what course
this is a part of

[fiction-factory]

Yes, the health damage aspect does seem to be a red herring unless the OP has incorrectly paraphrased the question and should have mentioned that there is an environmental smoke tax/levy of $15 per megawatt hour

[Peter Pedant]

well he is clearly not pushed for an answer .....

[gl556tr]

US currency, atrocious spelling - are we in that country over the pond?

[Konok812]

There is no best answer..and this part is of environmental economics. Bye the way i got my result. Thanks for your response.